Structural adhesive is a sort of adhesive with high strength and high
performance among adhesives, consisting mainly of silicone structural
adhesive, epoxy structural adhesive, polyurethane adhesive, etc.

Along with the development of industries such as real estate, automobile,
photovoltaic (PV) and electronics & appliances in China over the recent years,
Chinese structural adhesive market size grows rapidly. In 2013, China's output
of structural adhesives approximated 589.3kt and achieved the revenue of
RMB15.1 billion, among which the output of silicone structural adhesive, being
still the largest segmented product category in Chinese structural adhesive
market, accounted for roughly 44.7% in 2013.

The world's renown adhesive producers such as H.B. Fuller, Henkel, 3M, Sika,
and Cytec Industries sweep the most shares of Chinese structural adhesive
market due to their complete product mix and advanced technologies.
Additionally, those multinational corporations still have been aggressively
increasing their investments in China, in a bid to hold more market shares.
Take Henkel for example, it established the world's largest industrial
adhesive plant with production capacity of 428kt/a (targeted at the demand for
adhesives from automotive field and sundry consumer goods in China and other
Asia-Pacific regions) in Shanghai in 2013.

Most local Chinese structural adhesive enterprises were established in the
period between 1980s and 1990s. Although with a late start, they have been
developing rapidly and some of them such as Huitian Adhesive, Shanghai KangDa
New Materials Co., Ltd, Chengdu Guibao Science & Technology Co., Ltd., Beijing
COMENS New Material Co., Ltd., Hangzhou Zhijiang Silicone Chemicals Co., Ltd,
and Guangzhou Xinzhan Silicone Co., Ltd have been the competitors challenging
overseas counterparts in some market segments.

In March, 2013, Guangzhou Xinzhan Silicone Co., Ltd added the silicone
sealants capacity of 120kt/a and realized total production capacity of
180kt/a; Hangzhou Zhijiang Silicone Chemicals Co., Ltd is expected to embrace
the silicone sealant capacity of 80kt/a to 100kt/a in the second half year of
2014; Chengdu Guibao Science & Technology Co., Ltd is scheduled to raise the
silcone room temperature adhesive capacity up to 80kt/a in 2015, an increase
of 50kt/a compared with 2013.

Polyurethane structural adhesive market: Beijing COMENS New Material Co., Ltd
is the leading player in composite polyurethane adhesive market, and its
sales-output ratio has been always above 95% since 2008, the figure even hit
101.1% in 2013. Currently, the company is actively expanding the production
capacity of composite polyurethane adhesive, and it is expected that, till the
end of 2014 the company's capacity of composite polyurethane adhesive will
reach 42kt/a.

Analysis on the demand for structural adhesive from downstream markets
such as building, automobile, windpower & PV, electronics & appliances, etc.
and analysis on market segments such as silicone, epoxy and PU structural
adhesives;